The incoming IFRS 17 insurance accounting standard is an “opportunity” for accountants to highlight their value to their companies, according to Moody’s Analytics director, Eve Pastor.
While Pastor admitted that the changes to insurance accounting standards was going to be a “pervasive” change, the biggest in 20 years, ultimately she said that IFRS 17 was going to benefit accounting.
“If you’re in insurance accounting this is the biggest change you have faced, and you will want to be involved in this project and implementation. Because the people who are most involved in this are well positioned to really understand their company, financial reporting, and results for decades to come,” she said.
“I think there’s a lot of interest within companies in being on the implementation team and being involved in the decision-making process. It’s an opportunity for accountants to really highlight their value to their companies because it’s a situation where accounting can have an impact on the business decisions that are made.”
An advisory role
“Accountants are usually seen as recording history, and that has a value and is very important, but there can be a lot of consequences of these results and changes to business strategy, perhaps as a result of them. This is an opportunity for accountants to be in more of an advisory function as well,” Pastor added.
Overall, Pastor was optimistic that the new changes brought in by IFRS 17 would improve insurance accounting, making insurance a more attractive product to potential investors.
“I’m definitely hopeful about it. The results of 20 years of deliberation and thought by leaders across the world have resulted in improved accounting standards for insurance contracts,” she said.
“During this process of implementing IFRS 17, a lot is being enhanced within insurance companies to support this effort. I’m seeing improvements in data models, data warehouses, actuarial modelling systems, general ledger enhancements, Chart of Accounts, clean-up, and clarification. So, a lot of insurers are going to be in an overall better place just through this implementation process.”
Last month, a source told Accountancy Age that the IFRS had no intention of delaying the implementation of IFRS 17 beyond the deferred 2022 deadline, and Pastor said that this tough stance is beginning to pay off.
“Since there has been such a thorough review of all the big issues and topics, this does seem to be a point where there’s much more clarity. We’re seeing insurers moving ahead with their IFRS 17 implementations. Even some insurers that may have been delaying a decision on how to approach it are now moving forward and making sure that they can address the requirements.”